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A lender providing a loan of $2 million requires semi-annual payment of interest at a nominal rate of 6.8% per year, and repayment of the $2 million principal at the end of 9 years. The borrower plans to accumulate that principal for repayment at the end of 9 years using level semi-annual deposits into a sinking fund that earns interest at a nominal rate of 4.6% per year when compounded semiannually. What is the borrower's total cash outlay every 6 months?

A lender providing a loan of $2 million requires semi-annual payment of interest at a nominal rate of 6.8% per year, and repayment of the $2 million principal at the end of 9 years. The borrower plans to accumulate that principal for repayment at the end of 9 years using level semi-annual deposits into a sinking fund that earns interest at a nominal rate of 4.6% per year when compounded semiannually. What is the borrower's total cash outlay every 6 months?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Problem #6: A lender providing a loan of $2 million requires semi-annual payment of interest at a nominal rate of 6.8% per year, and repayment of the $2 million principal at the end of 9 years. The borrower plans to accumulate that principal for repayment at the end of 9 years using level semi-annual deposits into a sinking fund that earns interest at a nominal rate of 4.6% per year when compounded semiannually. What is the borrower's total cash outlay every 6 months?
Transcribed Image Text:Problem #6: A lender providing a loan of $2 million requires semi-annual payment of interest at a nominal rate of 6.8% per year, and repayment of the $2 million principal at the end of 9 years. The borrower plans to accumulate that principal for repayment at the end of 9 years using level semi-annual deposits into a sinking fund that earns interest at a nominal rate of 4.6% per year when compounded semiannually. What is the borrower's total cash outlay every 6 months?
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